London-based CLS Holdings plc has agreed to acquire a portfolio of three office buildings in Düsseldorf, Berlin and Hamburg for €89.7 million, excluding costs, from Commodus Real Estate.
The three properties are occupied by 31 tenants, providing a diversified and stable cashflow, said CLS.
The buildings are currently 93% occupied with a WAULT of 4.9 years and the current average rent is 22% below estimated market rents, thereby providing an opportunity to actively manage the assets to bring the rent to market levels over the medium term. The net initial yield on the portfolio is 4.8% with a reversionary yield of 6.1%.
Hansaallee 299, Düsseldorf, is a modern building which was developed in 2004. It is the largest property in the portfolio comprising 16,622 sqm (178,918 sq. ft) of space and 252 parking spaces. It is located in the ‘Seestern’ district and sits opposite Loerick underground station. The building has excellent connectivity with access to Düsseldorf Central Station in 20 minutes and the airport in 30 minutes. It is fully let to eight tenants with a WAULT of 3.9 years and has a current rent of €2.5 million.
Storkower Strasse 132, Berlin was comprehensively refurbished in 2020 and is situated between Prenzlauer Berg and Friedrichshain in the east of Berlin, in one of the most popular and fastest growing districts. The building has 6,105 sqm (65,714 sq. ft) of lettable space, fully let to ten tenants with a long WAULT of over 8 years. The current rent is €1.1 million.
The third property, Wendenstrasse 408 in Hamburg, is a 9,676 sqm (104,152 sq. ft) building with 191 parking spaces situated in Hamburg City Süd, a fast-growing submarket of the city. It is let to 13 tenants with a WAULT of 3.9 years. The current rent is €0.9 million. With an average rent of €8.4 / sqm / month, the building is materially underrented and presently 21% vacant, providing an immediate opportunity to capture market rents.
The acquisition of the portfolio is expected to complete latest in Q2 2021.
“These assets are high quality, well located German offices and benefit from a diversified tenant base with the opportunity to secure market rents and valuation uplifts in the years ahead. In the past year CLS has been able to capitalise on a range of opportunities in our target markets, acquiring or committing to acquire assets for over £280 million while remaining disciplined in our investment criteria,” said Fredrik Widlund, Chief Executive Officer of CLS.